Russia and Saudi Arabia have announced a deal to cooperate in efforts to stabilize oil prices but failed to agree on a production freeze plan.

Russia and Saudi Arabia say they have reached a deal to "act together" to try to stabilize oil prices. Nevertheless, the two countries – which are currently the world’s biggest oil producers failed to agree on a production freeze plan.

Russia and Saudi Arabia in a statement “noted the particular importance of constructive dialogue and close cooperation between the largest oil-producing countries," AFP reported.

This should have "the goal of supporting the stability of the oil market and ensuring a stable level of investment in the long term," the energy ministers from both countries said.

Their comments came in a joint statement after a meeting at the G20 summit in China.

Russia's Energy Minister Alexander Novak described the announcement as marking a "new era" in cooperation between Russia and Saudi Arabia and insisted it would have a "critical significance" for oil markets.

But there were no details on any agreement to freeze oil output, just weeks before Moscow and OPEC meet in Algeria to discuss the crisis.

Russian President Vladimir Putin earlier said that a potential oil output freeze deal among oil-exporting countries should involve some compromise on Iran’s production levels.

“I think that from the point of view of economic expediency and logic, it would be right to find some sort of compromise” on the Iranian output level, Putin told Bloomberg.

He said countries now recognize that Iran should be allowed to continue raising production as sanctions have been lifted against the country.

The oil freeze plan that has been raised by Saudi Arabia requires the global production of oil to remain at January levels. The plan is meant to boost the prices that have fallen 65 percent since peaking in June 2014 due to oversupply.

Iran has so far rejected the call to freeze its output as unfair and emphasized that it will go ahead with its plans to increase its oil production.

Nevertheless, it had made it clear that it is ready to join the plan after its output reaches 4 million barrels per day.